JUST PLAIN TALK: Biden signs American Rescue Plan

Buz Livingston
Buz Livingston

The American Rescue Plan is now law. It's a massive package, the most considerable in American history. Like everyone, there are some pieces I don't like. Before we discuss what's included, let's go over what's not. Despite Ted "Cancun" Cruz’ statements, no stimulus checks will go to undocumented immigrants, full stop. Until now, I thought an Ivy League degree meant you were smart; Cruz, once again, shows it doesn't.

Politics makes strange bedfellows. Conservative politicians and occasional liberal Bill Maher whine the stimulus is too generous. Even though Maher, like Cruz, has an Ivy League diploma, he struggles with Algebra. The stimulus cutoff for singles ends at $80,000, or less than $23,000 in inflation-adjusted dollars, when Maher graduated from Cornell. Pundits can be as clueless as congressmen. $23,000 was not big money when he began his career. 

White-collar workers who could transition to remote work and investors who didn't panic last spring are doing well, but many Americans continue to struggle. Despite my concerns about potential inflation and the Rescue Plan's size, it's an economic fact the 2009 recovery package was far too timid. Senator Angus King (I-Maine) pointed out that the bill has two parts. One directly addresses the health crisis, but the other, larger piece deals with the health crisis's economic fallout. 

The $1,400 payments have been expanded to include dependent college students and older relatives. However, the income limits have been tightened. The phaseouts begin at $75,000 for singles and $150,000 for married couples, ending respectively at $80,000 and $160,000.

The law beefs up unemployment benefits and extends them through early September. More importantly, for this year only, unemployment benefits up to $10,200 are tax-free for anyone making less than $150,000. Congress should make this provision permanent. Taxing unemployment benefits is counter-productive. The Act provides 100% COBRA health insurance premium assistance from April 1-Sept. 30. Uninsured people have a ripple effect on healthcare and insurance costs. 

The Rescue Act targets low and middle-income Americans. The Tax Policy Center projects middle-income Americans, earning between $51,000 and $91,000, will see after-tax income increase 5.5%. The expanded child tax credit from $3,000 to $3,600 is available for couples earning up to $150,000. Low-income Americans are now eligible for rental assistance, help with heating and cooling bills, and access to nutritional vouchers, ala "Meals on Wheels." 

Bars and restaurants have tax credits extended through 2021. Over $5 billion has been set aside for restaurants and bars with revenues less than $500,000 during 2019. $1.25 billion in grants is available through the SBA’s Shuttered Venues Operators Grants program. 

Wealthy people don't despair; money trickles upward. Will Rogers said it best. "Give it to the people at the bottom, and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellows' hands." (St Pete Times, Nov. 23, 1932)

You can't always get what you want, but Buz Livingston, CFP, can help you figure out what you need. For specific advice, visit livingstonfinancial.net or drop by 2050 West County Highway 30A, M1 Suite 230.